Amazon Experts Share Experience with Online Marketplace Ahead of FTC Lawsuit

Washington, DC (August 21, 2023): The Connected Commerce Council, an organization representing digitally empowered small businesses, today hosted a press conference with three small business leaders with insights and experience selling on Amazon ahead of the Federal Trade Commission’s (FTC) expected lawsuit to break up the online marketplace. 

“I work with multiple clients who have had tremendous success selling online through Amazon. Amazon provides small businesses access to millions of customers worldwide, easy-to-use and affordable fulfillment options, and quality customer service. The suggestion that breaking up Amazon would benefit small businesses makes no sense, as it would only make selling on Amazon and fulfilling orders more difficult,” said Will Haire, the owner of BellaVix, a small business e-commerce consultant in Raleigh, NC.

The FTC’s case will reportedly allege that by integrating Prime with Fulfillment by Amazon (FBA), Amazon’s shipping and handling service, Amazon requires sellers to use FBA and limits competition. However, Amazon doesn’t require using FBA to sell on the platform or qualify for Prime. Sellers who choose to use FBA do so because it is often the easiest and most affordable way for them to qualify for and gain the benefits of Prime, namely its free, fast shipping. The FTC’s alleged solution, to force Amazon to change how the marketplace operates, would jeopardize Prime for third-party sellers.

“We are a natural products company based in a small rural town in Iowa that sells on Amazon and other online marketplaces. Utilizing Amazon Prime and Fulfillment by Amazon (FBA) is highly beneficial to our business, and we worry about the consequences if FBA and Prime were to separate or become separate companies, as this would increase both time and costs,” said Joel Roodman, managing partner at Logic Product Group in Fairfield, IA.

The FTC is also expected to criticize Amazon’s Featured Offer function, previously known as the Buy Box, which provides prominent positioning in search results. Amazon uses several factors to determine which sellers and products are Featured Offers, including price, returns, customer satisfaction, and shipping speeds. The FTC is reported to allege that using FBA is required to obtain a Featured Offer. However, Amazon sellers report the opposite, obtaining a featured offer without using FBA. 

“I sell toys and collectibles on Amazon and use my own warehouse and fulfillment service, and that has not impacted my sales, or how often I win the “Buy Box”. Thanks to good reviews, fair prices, and a commitment to delivering our products on time, we win the Buy Box regularly, often beating out products sold directly by Amazon,” said Evans Richards, owner of reVend in Reidsville, NC.

The FTC’s investigation and potential lawsuit comes at a time of robust competition in e-commerce. A 2021 study shows that 87% of Amazon sellers also sell on at least one other marketplace, with 54% reporting selling on Walmart and 50% selling on eBay. In addition, Chinese online marketplaces Shein and Temu are becoming more popular daily, wooing U.S.-based sellers to their new marketplaces. 

Below are some additional quotes from the press conference participants:

Will Haire:

“Disrupting the Amazon marketplace takes away opportunities from entrepreneurs to pursue their passion and deliver good products to consumers.”

“It comes down to the disruption of the marketplace. Most Amazon sellers are small businesses, so what would it look like if they had to expedite shipping? The end consumer is going to pay more.”

Evans Richards:

“We have really found that Amazon is an integral part of our story and a lot of our sellers’ stories. Without Amazon, it would have been hard for us and [our clients] to scale across all the different marketplaces we sell on. Amazon is really what drove a lot of our first revenue and our first profitability as an e-commerce brand.”

“Every seller wants lower fees, but the value sellers get for the fees paid to Amazon is incredible, and it is more than any other marketplace.” 

Joel Roodman:

“What’s amazing about Prime is that we can deliver our shampoo in 2 days or even on the same day. Rather than running to the drug store, people are purchasing our products directly on Amazon. If we didn’t have access to Prime, I don’t think we would have grown as quickly as we have.”

“Amazon has become a key component of our business. We were able to compete at a very high level with some of the major CPG brands as a two-person operation by simply getting good reviews and servicing our customers as best we could.”